MeitY official on how SVB crisis has exposed gaps in the Indian startup ecosystem

The Silicon Valley Bank (SVB) crisis rocked the startup ecosystem across the world and also brought several learnings for its stakeholders. Jeet Vijay, CEO of MeitY Startup Hub (MSH), has a similar belief. MSH is the nodal agency of the Ministry of Electronics and IT that was set up with an aim to support and strengthen the tech startup ecosystem across India.

“We will learn from the SVB crisis and improve Indian systems according to the Indian startups’ requirements,” he told Business Today on the sidelines of an event in Greater Noida recently.  

California-based SVB, which was a startup-focused lender, collapsed on March 10 after it ran out of liquidity. Its customers, who were largely startup firms and their executives, scrambled to withdraw their money. While some succeeded, others were not able to withdraw as the regulators had taken control of the bank. However, soon the regulators assured the depositors that their money was safe. 

Vijay also called SVB a “great model” and pointed out how it became a strong reason for the growth of startups in the US markets. “Silicon Valley Bank was a great model but mismatch of assets and liability was an issue,” he said adding, “We want to focus on enabling Indian banks to meet the requirements of the startups as their contribution to the GDP is gradually going to increase." 

He also noted how the Indian startup ecosystem has evolved significantly over the years. “It’s a big achievement…how in a risk-averse country where everyone wants to be a doctor or engineer or a government employee, people are now thinking for themselves and are eager to start something of their own.” 

Despite the massive growth in India, a lot needs to be done, Vijay believes. “Startups are not able to scale up. There are over 90,000 registered startups out of which there are over 100 unicorns. This number is not enough,” he told BT. 

To solve this, he revealed that the government is focusing on building more accelerators so that young entrepreneurs find more avenues to grow their businesses with the right kind of mentorship.  

The SVB crisis has also brought to the forefront the need for encouraging more startups to domicile in India. But India is still climbing the ladder when it comes to ease of doing business. For instance, the the gaps in the Angel Tax space remain a concern. Prod him on the same and Vijay responded, “We are trying to focus on the ease of doing business in India. Angel tax issue is a very relevant problem and the government is deliberating on it.”
 

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